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tv   Real Money With Ali Velshi  Al Jazeera America  November 22, 2013 7:00pm-7:31pm EST

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>> this is al jazeera america live from new york city. we have a look at today's top stories. president kennedy's life and death remembered today. the 50th anniversary of his assassination. the city of dallas, where the president was killed, held it's first memorial service ever. cold weather with temperatures dipping in the 20s curtailed some of the events. carol kennedy serving in japan as u.s. ambassador, many leaving
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origami cranes. secretary of state john kerry is set to continue negotiations in talks with iran over nuclear energy. typhoon haiyan is the deadliest disaster to ever hit the country. 1600 people are still missing. "real money with ali velshi" is next on al jazeera. >> where the jobs are, i'll show you in american cities where hiring is hot. coal is falling to a loss. is it a bargain.
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plus is toys r us toast. the make or break for the largest toy store chain in the world. i'll ali velshi, and this is "real money." this is "real money." you are the most important part righof the show. join us. job creation has gotten a jolt with job openings and over all hires climbing to a five-year high. i use the word jolt for a reason. it's job open labor report. that's 8.6% higher job openings. this jolt report is important
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because it's a piece of data that is favored by janet yellen. apparently she likes it because it sheds light on the dynamics behind the more familiar monthly jobs report. that same jolt report, that was job openings, shows the number of hires rising to 8.7% increase from last year. with the private sector leading the way, of course. now apparently employers had been feeling pretty confident about the consumer demand. this is in september. thus they were willing to invest and expand and hire more people to accommodate that optimism. since then we've seen consumer confidence come down fueled by the damaging 16-day government shutdown in october. it remains to be seen whether the momentum was broken or if it
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continued. unemployment rose from 7.2 to 7.3%. we now have new data that i want to layer over those jobs numbers. those states in orange had unemployment at 8% higher with nevada, rhode island and michigan suffering with 9% or higher. now the states in blue are better off. they have unemployment rates below 6%. north dakota, the epicenter of america's energy boom, unemployment rate as low as 2.7%. the states in gray, everything that is not blue and orange, had an unemployment rate that was roughly the same as the national average. now many labor markets are driving because of a serge of high paying jobs. whean economics director, authof
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"new geography of jobs," an amazing book. he joins us, enrico, thank you for joining us. >> thank you for having me. >> we have two issues going on. a lot of states that are doing better than average. the lower unemployment rate than normal are doing it for two reasons. they're creating tech jobs or like in some places like north dakota, they're creating oil. but these tech jobs in your opinion is where we should be focusing. >> i think so, there are 10, 12 cities in the u.s. that are doing extremely well compared to the rest of the country, and they are all--they all have labor force that is highly innovative and highly educated. places like san francisco, where i live, which is literally in a boom right now. seattle, austin, texas, raleigh, north carolina, dc, boston, all
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these places during the recession it was less severe than the rest of the country, and this is all driven by innovation and tech jobs. >> explain to me how it is that one high tech worker creates up to five jobs? >> well, this, is the most part of this story in my view. every time a city creates one high paying job, five or jobs are created. if you hire an engineer in downtown san francisco, well, that person will go to a restaurant. they will go to a store, his children will go to school, so you'll need more teachers. you need more carpenters, doctors, lawyers, all these people are providing a service
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to that person. and their job is dependent on the vitality. >> what's the difference, then, why wouldn't a manufacturing worker create those other jobs or any other kind of workers? what is it about tech that creates more jobs. is it that the wages are higher? >> that's right. :ing does create jobs, but not as many as high tech. the reason is that the wages are much higher than high tech and there is more disposable income for the community. they're not always low-paid jobs. some of the jobs are professional jobs and pay very well. >> and you compare this in your book. the reason why i brought up manufacturering, you use austin as an example. texas is doing well because of oil. but austin is not an oil center, it's a tech center. you compare it to michigan where wages were once really high and
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really good and they can't recover from that. >> that's right. austin is a success story. it wasn't much of an economy in the 80s. if you look at job creation, they were lower than detroit. today wages in austin are 65% above wages in flint and detroit. i think it exemplifies what is going on in our economy. the centers of innovation there are a lot of highly skilled workers and innovation are risingish and the manufacturing areas are shrinking. >> what a great conversation, what a great book. economist at university of california-berkeley. the author of "the new geography of jobs." thank you. >> thank you for having me. >> gold is heading towards its first annual drop in value in 13 years. after it's worst weekly loss in two months the precious melt
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costs $1,240 an ounce. it's down 28% as much as the s&p 500 is up. gold is seen as protection against inflation. and inflation simply hasn't been a problem for some years. plus the fed is likely to stop pumping up the economy soon further reducing the threat of rising prices. it's drawn off investment money into the stock market and away from other investments such as gold. now this year's plunge in gold prices than been disappointing and costly for many investors, both professionals and amateur. many thought the fed action was lift inflation, as it kept interest rates low and send gold prices soaring. that belief in the power of gold goes back, way back. take a look.
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>> human beings have been obsessed with gold since the dawn of civil education from egyptian gold smiths to modern pop culture icons ♪ i love gold" >> more than 90% of the fresh metal has been mined but we're looking for more to turn into jewelry and to buy as bouillon. a government could only print as much money as the gold it had in its vault. but the u.s. eventually abandoned the gold standard in the 30's along with the rest of the world. >> what you have to do to have a gold standard, you have to go to south africa and dig up tons of gold, move it to new york, and put it in the federal resolve of new york. >> that does not stop the u.s. federal reserve from storing 6700 tons of gold in its new york vault on what have of the u.s. and other governments. but if you're in the market to fill your own coughe coffers, yy
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be like this, it's only worth what someone will pay for it. >> reporter: it has some wondering if now is the time to buy. that's a smart question to ask. after telling you when there is a huge run of off stock that it may be time to add to your por portfolio. why not gold? jason says not now. before i get your opinion on whether to buy gold or not we have to address this one basic thing. people tell me and they tweet me all the time. gold has intrinsic value that the paper doesn't. it's only worst as much as what someone will give you for it. that's the exact same as gold. >> i could not agree more. first of all, it's all per
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section. and to bring it down to a practical level, it's all about utility. in this world we live in, whether go to the u.s. you know, germany or wherever, currency is the only game in town, and billions of dollars, trillions of dollars of global business is conducted not via gold chips, coins or bars but in paper money. my favorite way to look at it, i look at what the biggest investors on the planet are doing with their money. such as warren buffet, such as black stone, one of the world's largest private equity firms. they are not buying gold. they're investing in income-generating business, real estate, companies. i like to see what the billio billionaires, and i don't think they're buying gold. >> let's take the conspiracy out of it. the idea of gold as a hedge.
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the performance of gold this year proves one thing clearly. different types of assets behave differently under the same circumstances. is it worth having some of these precious mel metals in their portfolio as a hedge. >> i would say yes, it is diversification. but above you get above the 15% allocation of gold i think that's extreme. that's fundamentalist. i think that's way too high. i think there is so much opportunity in the public equity markets even after a 28% run up that, you know, if you want to put money in gold, that's okay. but don't get too extreme about it. like the past ten years has been different because the stimulus policies were totally open ended. now we're talking about the taper. that changes everything. >> we all think it's going to end at some point. gold at these levels.
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why do you think--where do you think gold goes from here? how should we think about it? >> so right now gold is about $1,245 an ounce. granted it hit $1,900 recently. it's gone down almost 50%. the yearly low is still low, at 1180. gold is so close to the yearly low even from a trader standpoint i would not be surprised at all to see gold try to break that low of 1180 possibly heading lower than 1100, maybe at that point you could dabble in owning some gold, but at these levels, i would not be excited about buying gold. it may waffle sideways or try to make the low. >> thank you for being with us. >> a city best known for its beer is trying to brew a new future using water. >> it's us been about water. we know how to move it. we know how to process it.
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we can be the silicon valley of water technology. >> that story and more as "real money" continues. keep it right here.
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>> nowhere is the battle to create jobs harder than america's rust belt cities. consider milwaukee where 30% live in poverty. the middle class has chun shruna third. now they're betting on water to unite entrepreneurs, companies, government officials committed to making milwaukee the silicon watevalley of water.
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>> what i'm excited about today is that what we have here is not a field of dreams. it's a building of reality. >> reporter: in early september hundreds of people crowded around an unassuming corner of downtown milwaukee to celebrate what many hope will be a water shed moment for the city. >> we're making a big splash today. >> reporter: governor scott walker, and business leaders from around the state broke the ice at milwaukee's brand new global water center, the $22 million to transform the city into the nation's preeminent water technology hub. >> this is all part of fashions milwaukee as the fresh water capitol of the world. >> the seven story 100,000-square-foot clothing factor now serves as the high tech water incubator. it houses 25 companies and organizations exploring all things water. from purification to using algae to treat waste water.
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the water council, the non-profit group formed to spearhead the city's technology efforts, he said collaboration is key. >> here you have a vice president working with a professor on the seventh floor with an entrepreneur on the second floor. and they're here day in day out. just don't see that anywhere else. >> located near three rivers in lake michigan, milwaukee thrived in the 20th century catering to canneries, meat packing and the world's four biggest breweries. but rapid de industrialization in the 70's and 80's resulted in a city deep in debt, hollowed out by urban plight and in desperate need of jobs. >> economic development. we would like to create jobs for our children and grandchildren. we think we can do that around water technology. >> reporter: milwaukee native is ceo of the largest maker ever water meters in north america.
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he said companies survived by using to residential and others uses may now make up a $9 billion industry with 150 water-related companies that range from corporation tossup and coming start ups that build roofs that collect water. >> we can be the silicon valley of water technology. >> crucial to the effort was creating a pipeline supplying talent to companies. the university of wisconsin milwaukee created the first school of fresh water studies in 2009, and has produced policies experts all specializing in water. >> there is a research at the university helping to drive that growth. >> reporter: the state funded $50 million edition will mean a four-fold increase in students and cutting edge research in agriculture, farming, fish and water, or using genetics to
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identity new water contaminants. >> it's huge. i've been able to hire topnotch talent who would have moved away otherwise. >> reporter: young head o in thl water center. they expect to add ten employees in the next year and construction has begun on the $7 million water technology park. but the water council resists giving concrete projections or expected expecte industry growt. and many say it's a misguided gamble. >> there is an extraordinary disconnect about the rhetoric of the water initiative and the facts on the ground. >> reporter: the water sector makes up 3% of the milwaukee region 700,000 jobs. and less than 2% of the area patents relate to water technology. >> so it's a tiny sector leading
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companies in the sector have been shedding jobs in the milwaukee area. they've been offshoring, outsourcing jobs to the united states or mexico. if this is something that will produce jobs for the 50% black male jobless rate or we've lost 50% of those jobs in milwaukee. where are those jobs coming from? >> nusome counters that it will bring jobs at all skill centers, and it hope milwaukee will leave the rust belt behind. >> i want to be number one in the world. i want silicon valley chips, i want them to think milwaukee water technology. >> reporter: david shuster, al jazeera. >> in case you're wondering about the market it's tapping into. water is worth $100 billion in
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the united states alone. toys r us could be in trouble if it doesn't move a lot of loot this year. that story and more on "real money." keep it here.
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>> struggling retail icon jc penny which continues to post big losses got more bad news. it's being booted off s&p 500. and yc penny is demoted to a separate s&p index because jc penny stock has lost its value, making the company worth a lot less to investors. this was a blow to jc penny who attempted to reinvent itself. you say holiday. i say toys. i say toys, you may very well say toys r us. the retailer founded in 1948 has
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become part of the american retail landscape famous for that weird giraffe and it's huge stores. with 1500 locations worldwide, the toys r us track record has not been all fun and games after a quarter century as a public company it went private in 2005. it's stock collapsed. flash floored to today, and its bonds are trading like junk as it continues to lose share to online rifles and sales declines. do bond investors know something that we need to know? in a recent piece, matt, good to see you, it's not a public company. companies like jc penny you can see the mess they're getting into because you can see the stocks are trading at. but in here bonds are
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outstanding for toys r us. >> the price versus been slumping pretty sharply and this has caught the eye of credit rating agencies, and it caused them to raise some eyebrows. >> now toys "r" us were going to attempt to become a public company again. they shelved their plans for an ipo. people who go to their stores leave with the impression that it's not the place it used to be. what's the problem? >> there are a couple of problems. you mentioned at the open they are a large iconic retailer, but they're facing relentless competition from the discount retailers, the wal-marts of the world not to mention target. that's also, they're also facing online competition. they had been a little bit slow to get their online game together,, of course, massive, has taken some share there. so they're facing those challenges. they're also facing some real
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shifts in what kids want. kids today are going to be almost likely to be playing with that computer as they are a teddy bear. so this puts them into a whole new range of competition. >> which by the way you can deal with at target and walmart, but not necessarily toys r us. >> there are a lot of savvy retail whose sell those products. so the land cape is s changing under their feet. >> is there something that can change this. >> jc penny, sears, these are legacy retailers who are going through a very same thing. something that might be slightly different for toys r us is the fact that it does have a lot of debt. this is lake by the inheritance of the 2005 lbo, the leverage buyout. >> when they went from a public company to a private company. >> exactly. they're dealing with this debt overhang. just like for a family house old it makes the margin shrink a lot
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when you have a lot of debt. >> thank you. final thought today on payday loans. these are sort of cash advances for people who need $500 or less. usually due on the next payday. usually these are under two weeks. they smack you with a huge finance charge, and it's not just some seedy pawnshop giving out the loans. banks are doing it, too. these are called deposit advance loans. they come with hefty fees. the banking regulator said the loans may not be in compliance with consumer laws, and they'll join the fdic in taking a closer look at these types of loans. the banks say they'll review the laws but warn tighter regulation of these loans could force people to go use those shady lenders or pawnshops.
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i'm glad regulators taking a hard look at their practices. we'll keep you posted. i'm ali velshi. thank you for joining us.
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>> hi, i'm lisa fletcher, and you're in the stream. could you live in just 100 square feet? joining us as we explore how living small is challenging the american dream. >> from mcmansion to tiny houses is a growing movement here in the u.s. where people are trading in big to live small. one, the tiny house movement has hundreds of members, and one community said it's a very charmer concept and they learn re